Investment banking and strategy consulting are like avocados and quinoa: both attract the elite (or, in thewords of one ex-McKinsey director, “insecure, deeply left-brain, hyper-intellectual, OCD over-achievers.”). Both pay well. Both involve some serious commitments of your time and some heavy academic achievements.

This is not to say that banking and consulting are equivalent careers though. Like avocados and quinoa, they have some pretty substantial differences. What works for one person will not work for the other.

So… which is right for you? We asked a large population of people with experience of working for Goldman and McKinsey, or J.P. Morgan and Bain & Co. for their opinions on the differences between the two industries. These – plus some quantitative information – are listed below.

Are you a banker or a consultant? All will become clear.

You want higher pay? Choose banking (for the first 20 years)

If you want money, you probably want to work in banking. As the figures below from pay benchmarking company Emolument.com are to be believed, front office banking careers are generally a lot more lucrative than careers in consulting.

A note of caution, though. One ex-McKinsey consultant who now works in investment banking says the figures above are a simplification. If you play a long game in consulting, he tells us you’re likely to come out on top of the bankers. Bankers are paid more at the start of their careers, “But once you reach MD-level in an investment bank, compensation starts to plateau,” he tells us. “In banking, you can be subject to volatility, both from the market and personal performance. Meanwhile, consultants are on a consistent trend upwards.”

While the pay in banking is plateauing, he says compensation at places like McKinsey only really kicks in at the senior partner level. He also says that if you look at the median compensation of consultants with 15 years’ experience versus that of bankers at the same level, consultants will come out on top.

You want job security? Choose consulting

This brings us to the second point: job security. Your chances of having a 15-20 year career in consulting look a lot higher than your chances of having a 15-20 year career in banking.

By comparison, all banks are under pressure to cut costs and heads. In the five years following 2008, American banks and insurers slashed 400,000 jobs according to the U.S. census.

Banking therefore looks like the more risky career option – you might get paid more to start with, but it might not last.

You want weekends off? Choose consulting

Everyone we spoke to (literally everyone) agreed that consultants generally have a better life than bankers.

“My life is unimaginably better as a consultant,” says one ex-M&A banker. “My current colleagues are always listening in horror and shock when I recount some of my long months on less than a handful of hours of sleep when I was in M&A. Leaving at 11pm is really late in most cases in consulting.”

The really big difference, though is weekends: “Most consulting firms treat the weekend as sacred and it’s relatively rare to get an e-mail from a partner or a client.,” he says.

This isn’t to say that the hours aren’t sometimes tough in consulting too. One consultant said weekend work is often needed just to catch up. And even when consultants don’t work weekends, they spend their weeks ‘on the road’ (see below), miles away from home. An ex-consultant we spoke to said weeknights are often a killer in consulting jobs – you’re lucky to get in by 10pm.

Like banks, consultancy firms are alert to the long-hours issue. Boston Consulting Group has been implementing a policy known as ‘Predictable Time Off’ for years. Under it, consultants at the firm are assigned ‘predictable periods’ of downtime at the start of a project. During these periods, BCG consultants are required to be off completely – they mustn’t check their email and they mustn’t check their voicemail. Meanwhile, McKinsey & Co introduced flexible work programmes a few years ago – employees there can now take blocks of unpaid leave between projects, work three or four days a week, or take a leave of absence for up to a year.

You want less travel? Choose banking (for the first 10 years)

Everyone agrees that the big downer about consulting is the travel. If you work in banking you’ll commute in and out of your office on Wall Street, in New Jersey, or in the City of London every day. Yes, you might have to do a lot of travelling if you’re in a senior client-facing position, but if you’re a junior M&A banker or a trader you’ll mostly be glued to your screen at the mother-ship.

By comparison, if you work in consulting the travel is immediate. And it’s relentless. The ‘McKinsey Client Model’ involves, ‘Monday to Thursday at the client site and Fridays in your home office,” according to one McKinsey employee. That client office could be nearby, or it could be hundreds of miles away. If it’s hundreds of miles away, you’ll spend your weeknights in some kind of faceless hotel. “The travel is a killer – you’re on the road non-stop unless you get a plush home city assignment,” says one ex-McKinsey consultant who now works in banking.

You want interesting work? Choose…consulting

Junior bankers in IBD spend their lives creating financial models in Excel and pitch books in Powerpoint. Consultants, meanwhile, spend their time creating diagrammatic models and Powerpoint presentations. Junior bankers devote their time to studying the value of a company and its capital structure; junior consultants think about the strategy of a company and its organizational structure.

Junior M&A bankers who’ve gone into consulting say the work they’re doing as consultants is more interesting. “I’m given a lot more responsibility here,” says one. “Already, I’m presenting to the top management of our clients, whereas when I was in banking I had little hope of meeting clients until I made vice president.” Another consultant says he’s presenting to top management and to general employees which gives him a better feeling for how the business really works: “In banking, you only think about the people at the top.”

One ex-banker turned consultant says the work in banking was too hurried and samey: “In banking, you end up specialized in a particular industry whereas here I’m more of a generalist. As a junior consultant, I get to handle a lot of different kinds of challenge each day and it’s about finding the right answer to a difficult problem. In banking, it was usually about getting the same things done in a short amount of time – we always felt very rushed.”

In theory, life as a consultant should be more fulfilling because consultants actually get to implement the recommendations they make, but one ‘executive transitioner’ who works with consultants moving into other industries says consultants get frustrated with the endless presentations and the limited opportunities to put their ideas into practice (a bit like junior bankers who put together endless pitchbooks for M&A deals that never happen). For this reason, he says they often move out of consulting and into management roles in industry instead.

The ex-McKinsey consultant-turned banker says life in consulting can be interesting due to the sheer variety of projects. On the other hand, the executive transitioner says some junior consultants get staffed across a broad range of projects managed by a range of different partners just to keep them interested, and that this can be come a struggle in itself.

One ex-consultant who now works for J.P. Morgan, says the standard of work is higher in banking: “In consulting I often felt that we were guessing the solutions without any reasonable argument. In banking, 100% correctness is always required and the level of work delivered to clients is very high.” This consultant also says that consultancy firms waste time and are inefficient: “In consulting, 4,000 slides were thrown on me to find something relevant for the task I had to do. You don’t get this in banking.”

You want to use your numerical skills? Choose banking

What makes a good banker vs. a good consultant? One McKinsey & Co. analyst who worked for a bank says bankers are more analytical: “They’re more numbers driven,” he says, adding that bankers use numbers to build up a big picture. By comparison, he says consultants have better communication skills and more aware of the small details behind a successful organization. “Junior bankers are routinely used to narrowing down a lot of info (eg. due diligence into its essential components), whereas most consultants will focus on getting additional information, creating deeper insights.”

Consultants are probably more interesting people than bankers. Juniors who’ve worked in both industries tell us consultants are more “lifestyle” focused (i.e. they actually have lives outside work). By comparison, one consultant says M&A teams tend to be comprised of pretty similar high achievers. “This is great, because you’ll make friends for life in your analyst class, but in consulting you meet people with really varied interests and backgrounds, which can be more enriching.”

Another consultant who’s experienced both industries says people are smarter in banking. Consultants are good, but not that good.

You want a non-hierarchical culture? Choose consulting

While banks are all about saving money, consultants still have cash to splash. Juniors tell us the lifestyle in consulting is more fancy than in banks. While banks like Nomura now only offer cabs after 10pm and all banks breathe down your neck on things like colored photcopying, consultants say they get cabs to and from work, “many expensive dinners on company, private drivers to the airport.”

Another plus is that hierarchies in consulting firms are often flatter/less evident than in banking. “You feel that the seniors you’re working for actually care about your personal development and they’re often quite proactive in getting to know you beyond the scope of work,” says one McKinsey analyst. “That wasn’t really the feeling in banking – although granted I wasn’t to keen on spending that much more time with my MD after having worked with him for a daily average of 18 hours over at least a month.”

You want job prospects? Choose consulting

What happens when you decide you don’t want to work in banking or consulting any more?

By comparison, swapping out of banking can be more of a challenge. The best people from investment banking go into private equity or event driven hedge funds. Sometimes they go into corporates to work for ‘in-house deal teams.’ But there are often more people who want to leave banking than there are places for them.

Interestingly, it seems very easy to go from banking into consulting and less easy to move in the opposite direction: there are plenty more people at McKinsey who used to work for Goldman Sachs but far fewer at Goldman Sachs who used to work for McKinsey.

One junior consultant says this is because banks offer an excellent schooling: “I’ll never learn as much in consulting as I did during those two years in banking, but I’m having a lot more fun as a consultant.”

If you’re smart therefore, maybe you’ll start out in banking and then move into consulting as your career progresses. That way you’ll be able to sample both worlds. And if you still can’t decide? You could always watch this.

Comments (11)

I’ve worked for both. My take is that you will earn far more in a bank than a consultancy. Depending on the bit of the bank you work in (e.g. equities research), your hours can be reasonably predictable, if long. Whilst entertaining clients can be a bore, at least you are a tube ride from home. However, the work can be seriously dull and there enough half-witted inbred fools populate several member only clubs.

Consultancy can be gruelling and is certainly less predictable than banking. How bad depends on where most of your clients are. If in the city, its ok. If in Kazakhstan, Chad and Mexico, it’s time to bore people with your airline club card points status and funny stories of “that time you were nearly kidnapped in the Sudan”.

The top consultancies have a terrible macho culture amongst the lower consultant grades. Your weekday evenings are certainly not your own and your weekends are variable. However, as the vast majority of people who work there are highly academically talented types who also “ran the Uni newspaper, played tiddley winks for the college and set up their own successful e-business, all whilst drinking the college bar dry every night”, then it is less of a shock to them. Personally, joining later as a subject matter expert, it was a shock.

That subsides when you start to develop your own pipeline of work. You also become freer to choose what sort of work you want to do. That is not so true in a bank. You certainly get to see and understand more about how businesses work in consulting. If you go to work for one of the “second tier” of consultants (Deloitte, PWC, Accenture, etc) then your life is certainly much easier than at McKinsey etc and if you are a Director or Partner, you will be getting very well rewarded (almost as much as a banker with 3+ years experience!!).

If you are interested in business, just go and set your own one up. If you are interesting in making money, just go to work for a bank. If you like having people telling you you are doing a “great job” and have “exceeded expectations”, and also have a good line in bullsh*tting about your experience, go to work for a consultancy.

You pay for bankers is *WAY* off. The 20 yr mark is achievable within 5 yrs, very easily. The consultancy pay looks low, but I have no visibility so won’t comment. The “Banking” comp looks like you’re factoring in middle/back office into the mix. Front office bankers get significantly more than what you’re suggesting – i.e. there is no comparison, in the short/medium term, of how much money you make in banking over consulting. Please do your research more thoroughly.

Admittedly, the article is really a comparison of IBD and consulting – I didn’t speak to many people in S&T as there’s less of an overlap. The pay figures are from Emolument and are medians – maybe this is why they’re so low…?